Islamic banks fit to fund Asia's huge infrastructure needs: S&P
Asia's solid economic growth and surging population will need significant developments and upgrades of its infrastructure, Standard & Poor's Ratings Services said in a recently published commentary, titled "Will Islamic Finance Play A Key Role In Fundi
"With the outlook in global lending markets still uncertain, conventional financing such as bank funding might not be able to completely shoulder this huge financing task. We believe alternatives, such as Islamic finance, could play a key role," said Standard & Poor's credit analyst Allan Redimerio in a statement released from the Singapore office.
The Asian Development Bank (ADB) recently predicted that Asian economies require US$8 trillion over the next decade to fully address the region’s basic infrastructure needs, including developments in areas such as water, transportation, and energy.
In the view of S&P, Islamic finance would be a good match for financing Asia's infrastructure funding gap, especially sukuk bonds. The Sharia principles governing Islamic finance ban speculation and specify that income must come from shared business risk. What's more, Islamic finance is based on the concept of asset backing.
